BGI unveils corporate bond ETF

EUROPE – Barclays Global Investors is to launch Europe’s first corporate bond exchange-traded fund, through its partner iShares plc.

iShares iBoxx € Liquid Corporates, as it will be called, will be launched on March 17 with 750 million euros of capital. Exchange trading will commence on the Deutsche Boerse on March 19.

The new ETF offers investors a diversified basket of 40 investment-grade bonds that constitute the iBoxx € Liquid Corporates Index (an index compiled by seven investment banks and the Deutsche Boerse), at a total expense ratio of 0.2% (management fees plus trading fees).

As a tool for institutional investors, the ETF can be used for “hedging, sector rotation/asset allocation, instant market exposure for cash holdings, core/satellite strategies and long/short strategies (spread trades). In addition, it is a viable, cost-effective alternative to futures, OTC derivatives and notes,” said iShares.

ETFs are becoming an increasingly popular method of investing. During 2002 ETF assets under management in Europe rose 81% from 4.65 billion euros to 9.77 billion euros.

Barclays Global Investors Ireland acts as manager of iShares plc, while Barclays Global Investors manages all iShares’ exchange-traded funds. iShares accounts for around 45% of listed ETFs worldwide.

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